Learning from the Australians

With a more accountable regulatory system, the Australians have proved that – given time and the right conditions – they can form a culture... one that is far better than our own.

Much as we may hate to admit it, the Australian philosophy towards implementing change is often way ahead of our own. From swimming and cycling through to cricket and rugby, our friends down under have certainly taught us a lot in recent years in terms of how we should approach challenges and their input has gone a long way to improving our results.

Last week, Libertatem met with former Australian Prime Minister Tony Abbot. It gave us an opportunity to learn how the Australian Financial Services industry has progressed and compare it with our own.

Australia carried out their own version of RDR five years before the UK regulator did the same here. Consequently, they are quite a long way ahead of us in terms of where their financial services industry is now, so we were keen to meet with Mr Abbot to find out what lessons had been learned.

As with our own market, FOFA (Future of Financial Advice) witnessed a dramatic drop in the number of Australians accessing financial advice. And, much like our own market, Australian advisers became so focused on a compliance-based advice approach, they quickly forgot about the client.

They are now in the process of rectifying that situation and, along with improved professionalism and greater transparency, they are working hard to expand the marketplace again. 

Innovation is being encouraged by the Australian regulator, particularly with regards to Robo advice, but they also acknowledge that it is not the solution. Instead, it is used as a small part of an overall package which places the client front and centre of a relationship which is still maintained with the adviser.

Perhaps one major difference between the two systems is the way the regulator down under is engaging with the sector. As the digital world revolutionises the way we all do business, both sides of Australia's regulatory divide are working together for the benefit of the consumer. 

As South Africa and Canada prepare to launch their own regulatory systems, they will be looking closely at how both Australia and the UK have progressed. We may, once again, have to admit that the Australians have the upper hand.

The prime difference is that in Australia, South Africa and Canada, the regulator is held accountable to Parliament and government. It cannot just impose solutions and then take no responsibility for the mess created.

If investors are going to have confidence in the sector we need to ensure that there is an accountable regulator and, in addition, an accountable Ombudsman. Then – once the field of play is more equal – working together may actually be achievable.